Boston, MA -- (SBWIRE) -- 09/11/2013 -- Our current forecast calls for gas production to continue its upward trajectory in Bolivia; however, we are pricing in slower growth from the end of the decade. The country's oil and gas sector has largely weathered broader concerns related to the business environment, where other key sectors have seen government intervention. However, the threat of resource nationalism remains a key risk to the downside.

Redevelopment of producing fields, the upside from sites currently under appraisal, and new exploration support an optimistic view on Bolivia's upstream, but above-ground threats continue to weigh on our forecast. With regards to liquids, while condensate volumes from gas production may allow production to surprise to the upside, we are holding to a bearish view as we expect output to trend downwards over the long term - notwithstanding occasional recoveries in output due to condensates production.

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We highlight the following trends and developments in Bolivia's oil and gas sector:

- Bolivia is currently planning an audit of it oil and gas reserves, with an aim toward a notable increase in official figures. An upgrade may attract new interest and boost investment into the country's upstream. However, a downgrade - similar to the one that occurred in 2011 and saw official gas reserves reduced by more than one-third - could dampen interest in the country's gas potential.
- Officials are also increasingly looking at unconventional opportunities despite a small downgrade in technically recoverable shale gas resource estimates in the EIA's most recent report on unconventional opportunities. Stated owned Yacimientos Petroliferos Fiscales Bolivianos (YPFB) is reportedly holding discussions with Argentina's state owned YPF for the development shale gas.
- Notwithstanding persistent concerns regarding Bolivia's business environment, with government nationalisation in other sectors undermining the country's ability to attract foreign investment, the oil and gas sector continues to attractive interest. Steady progress on upstream deals with Gazprom, Total and YPF should see new funds directed toward exploration and production (E&P). Importantly, recent deals come after several licences went unawarded after a December 2012 tender.
- We expect robust growth in gas output over much of our forecast period. Growth will be driven by the development of existing fields with additional infrastructure and boosted recovery, as well as gains from the ramp up of new fields that have recently come online. We see further upside from fields currently under appraisal that may soon be brought into production. Among the risks to our forecasts, aside from delays and technical challenges, is the threat of deterioration in the country's business environment that could slow or delay planned upstream projects.

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